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AT&T's Stephenson names Dallas as next FTTH stop

AT&T (NYSE: T) CEO Randall Stephenson reiterated to investors this week how pleased the company is with the cost dynamics for its initial fiber to the home (FTTH) deployment in Austin, Texas, and said it is going to roll the service out in other markets this year.

Stephenson

Speaking at the Morgan Stanley Technology, Media & Telecom Conference, Stephenson said the plan is to bring the service to, for example, Dallas this summer.

"The market adoption and the performance of our U-verse Gigapower technology has been very, very encouraging," Stephenson said. "In fact, we're so encouraged that we want to begin taking this to other communities. What we're doing in cities and municipalities where we can get the terms and conditions we got in Austin we're redirecting VIP investment to fiber to the home deployment."

Besides the cost structure, the other driver for AT&T's FTTH and Project VIP drive is Comcast's (Nasdaq: CMCSA) pending acquisition of Time Warner Cable (NYSE: TWC).

According to a report in FierceCable, the combined Comcast-TWC would create a cable MSO with 33 million subscribers, including 13 million more video subscribers than its nearest satellite competitor DirecTV (Nasdaq: DTV).

"We look at this and say this is an important transaction and we think will have a fulsome regulatory process, but our studying of this is it probably gets done and will have some hair on it in terms of conditions," Stephenson said. "That being the case when you think about 2014, it focuses one mind on prioritization."

Stephenson added that this deal "puts a heightened sense of urgency on the VIP build, and we're going to be very aggressive pushing hard on completing all the areas of VIP."

While FTTH is a key future driver, the Project VIP initiative continues to drive its more traditional IP fiber to the node (FTTN)-based broadband and IPTV service into more households.

In the fourth quarter of 2013, U-verse revenues grew 27.9 percent year-over-year and were up 7.0 percent sequentially over the third quarter of 2013 as subscribers topped the 10.7 million mark.

In addition to consumer growth, the telco reported strong U-verse adoption by small-to-medium sized businesses. During the quarter, it added 78,000 new U-verse business customers.

Consumer U-verse IPTV broadband and IPTV is now a $13 billion run rate business.

"We're going very aggressively on deploying our IP technology and fiber deeper into the network, passing more homes with our video component," Stephenson said. "Some questioned whether we wanted to invest that much into last mile capability and I think we're proving that that was the right decision."